Housebuilders Redrow cut 40% of workers

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Housebuilders Redrow and Bovis Homes followed in the footsteps of rivals today when they announced they were both cutting their workforce by 40% after house sales crashed.

The cuts take the total job losses in the housebuilding sector since the start of the year to 5,150, adding to fears that the housing downturn will be deep and prolonged.

Redrow, one of the big four housebuilders, warned the sector has experienced an "unprecedented decline in the fortunes of the UK housing market in a very short period of time".

Redrow said it has cut 550 jobs, leaving it with 850 people, while Bovis will have axed 400 by the end of this month from its 1,000 strong workforce - including both office staff and workers at building sites.

Yesterday Persimmon, the largest company by market value and the most profitable, announced it was laying off 2,000 people, also 40% of its workforce. Barratt has axed 1,000 staff and Taylor Wimpey 900. Smaller firm Kier Residential is to cut 300, 60% of its staff.

Redrow said it sold 3,925 new homes in the year to June, compared with 4,823 last year, with the average price falling to £157,000 from £159,000.

"The UK housing market continues to be severely affected by the credit squeeze," Redrow said. "Homebuyer confidence is now also being influenced by concerns about the future for house prices and interest rates. As a result the market for both new and second-hand homes has declined rapidly to transaction levels not experienced for very many years with the price of homes now declining."

It warned that cancellations have jumped in recent weeks as customers have not been able to secure mortgage deals. Its order book stands at 1,189, compared with 2,148 at this stage a year ago.

Redrow is closing two offices, which will leave it with eight. It said it expects tough market conditions "may persist for some time". The housebuilder is in talks with its banks about refinancing its £225m debts.

Bovis Homes reported that its sales have fallen by 35% to 1,482 homes at the end of June. It wants to focus more on social housing which has not been as affected by the downturn.

Shares in Redrow rose 5.75p to 102p in early trading while Bovis shares was up 4p to 321.5p.

Housebuilders Redrow and Bovis Homes to slash 40% of workers | Business | guardian.co.uk